Posts Tagged ‘Blue Ocean Strategy’

The book is simple, has simple concepts, and is a reasonable read for those that are starting their first business. Lots of motherhood statements, and bleeding obvious, but we all need to learn the simple lessons some how.

He does make an interesting point :
“sustainable traffic is THE source of competitive advantage on the web.”

Whilst I don’t truly believe its the only advantage, it might well be the most powerful.

Lots of the web 2.0 community success supports the focus on traffic.

I also believe reduced internal cost (and I dont mean price) is also another way to compete. Basically do something similar, but do it cheaper (sort of basic Michael Porter analysis).

I also like his ideas to opportunity models. The pictorial of a lot of ideas into a funnel, a matching criteria, and only a few opportunities out is simple, but well presented. The book positions an idea that fits as an opportunity, some of the fit characteristics included:
– personal fit
– capabilities
– interest/passion
– profitability
– scale

Whist an obvious idea, its simply over looked by many starting their first business. My advice to all new projects/business’/products is simply, if we do reasonably well – how much can we make ? The answer needs to be huge, at least some multiple of a salary.

The book also talks about a ‘money making machine’ – with strategy/operations/revenue. This is how I tend to focus new business ideas, can I mechanise large parts of the business, what are the business systems that need to support the business. I go back to strategy changes to ensure before I start, that the margins are high, and you are building a core business system. This was heavily influenced from my reading of ‘rich dad, poor dad’ books.

I start with the idea, work out margins, what business systems are needed to support the operations, mechanise, strategy to increase margins and increase automation. Then I work out how to capture the customers, and then go back to strategy, to make sure that there is a fit between margins/strategy/customer capture. Customer capture is clearly the number 1 business system. The rest is your money making machine.

I have never heard of the the first guy – but they have a podcast listed for him – guess where I am heading 🙂

The business leader types are always in the press etc.

The top 12 – I either know a reasonable amount about, or have read their books, or studied them in my Masters of Management (MGSM crica 1998).

Even if you don’t agree with what they say, or the texts are dated, its still very important as manny people are still running on those older models.

I think everyone should understand what Michael Porter has to say, here is an overview. Not that I would start a business based on that – but lots of older companies are purely based on it, with MBA types running those companies. You can then use that knowledge to contrast ideas like ‘blue ocean strategy’ and Seth’s ‘purple cow’.

I might do some more work on:
– referencing which are old/new world thinkers
– which ones I don’t know enough about.

Just listened to podcast from Phil McKinney. He spoke about the ‘experience economy’. Roughly its like why is going to DisneyLand a premium over the local ride park. How does Harely generate such an emotional response ? You pay a premium to get an experience, as opposed just to a fun night out.

Obviously much of this is just strong branding over a long period of time.

It also occured to me, you need to understand where the experience is in your industry. Then you need to go and own that experience.

I’ll reference ‘Circ de Soleil’ and the book Blue Ocean Strategy. BlueOcean talked about Circ-de-Soleil beat out circuses, by making the acts faceless, and removing the expensive actors (both animals and invididual stars). BlueOcean was able to control costs, focus on a better paying market charging a premium price. Less costs and premium prices – now that’s profit.

Here I am saying Circ-de-Soleil owned the experience. Its like running an art gallery perhaps, you dont want to be at the beck-and-call of the art industry, as to who will show in your gallery.

You need to own the experience – not the artists. You need to still make the same money, if you change artists, someone else signs your star. This also stops a star leveraging their value for more pay.

Another good example is say – ‘Kaos Comedy Restaurants’. Having the waiters be funny, tell jokes, and be rude – all part of the night. They owned the experience, and not the artists.

RedBubble seems to be generating lots of attention, and recently won a cool-company award. They own the platform and the community in which the art is shown. RedBubble aren’t in trouble if a single artist goes. You dont go to redbubble to get to just one artist.

I guess this is ultimately what will put Hoyts out of business. They don’t own the movies. No-one is loyal to Hoyts – we’ll go where the movies (the art) goes. OK – they still have some experience going to the cinema.

Hoyts whole ‘only at the movies’ campaign is rediculous. For the life of me – I cant understand why Hoyts dont market ‘better at the movies’ – ‘or more fun at the movies’, or do lifestyle marketing. The only edge/value they have left is the experience – yet they market about the movie itself.

I can even see a time, when a huge star disintermediates the whole movie industry, and sells direct over the web, DRM protected movies. Like the next star wars movie – ‘only on the web’. But that’s another story.

OK – one of the most brilliant marketing strategies is bundling …. or ‘meal deals’.

Think about what they did for Macca’s. Instead of selling burgers for say $3, chips for $2, and drinks for $2 – they sell a ‘meal deal’ for $5.50. You essentially get chips OR the drink for nearly free.

Instead of sometimes only selling a burger($3), or sometimes a burger + drink ($5), they more often sell a ‘meal deal’ for $5.50. Macca’s ends up with a higher average sale price. On average they sell more to each customer.

So what if you have ‘bundled services’ or ‘bundled products’ in your company? Perhaps you’ll increase the average sale. GREAT – we are getting more profit.

WRONG. What if the customer say doesn’t want or doesn’t respect part of your bundle.
– at best you will have increased your cost to deliver that sale (lowering your profit).
– at worst, they wont buy from you, as there is part of the offer they are not interested in
– overtime, you have increased your costs, and will disincent customers to buy from you …. not good

‘Blue Ocean Strategy’ clearly says you can attack a market by ripping out unloved features, and reducing costs. (I’ll write up a full review of Blue Ocean Strategy at some stage).

A simple solution would be to offer the components of your service seperately. And be proud of each component, talk highly of each of them. And ask the customer what components THEY want.

Its easy for sales people to think ‘if I put MORE value into the deal’ the customer might be more likely to buy.

Don’t sell them anything they dont want, or dont value. It will just end up a cost to you, and disincenting your customers.

Eventually bad deals, with too much cost, will destroy your company.

If you were smart, and to push the envelope, you have a bundle on offer, that is MORE than the some of the parts.